Doge: The American model of spending cuts that inspires André Esteves
André Esteves, founder and chairman of BTG Pactual, expressed envy of the Americans for Doge, a department led by Elon Musk in the Donald Trump administration, focused on cutting spending.
During the BTG Conference, Esteves stated that a government efficiency department should be mandatory, just like in the private sector. He emphasized the need to constantly seek efficiency.
Doge was created by Trump to coordinate federal spending cuts and restructure the government. However, a Reuters analysis showed that U.S. government spending increased in the first month of Trump's term compared to the previous year, indicating that the cost-cutting effort has not yet reduced the country's fiscal obligations.
In the panel, Esteves interviewed Kevin Warsh, former member of the Federal Reserve Board of Governors, about the increase in public spending globally. Warsh shared Esteves' concerns and said that the world may be underestimating the potential of Doge.
Warsh mentioned that even if Doge manages to cut $1 trillion from the U.S. budget, it may not be enough to achieve fiscal sustainability, but it is an important step. He believes that Doge signals to the markets that the U.S. is committed to fiscal responsibility, buying time to avoid a "turning point."
Warsh also highlighted that operating with high deficits in times of peace and prosperity prevents the U.S. from preparing for future crises. He argued that excessive public spending harms sustainable growth and that every dollar taken from the federal government could be directed to the private sector.
Warsh concluded that the U.S. may experience an "expansionary fiscal contraction," something rare in history and textbooks.
Source: Folha de S. Paulo